Business research news, tips, facts and sources from the Library research team at the London Business School Library.

November 2011

24 November 2011

The least developed countries (LDCs) are a group of countries that have been classified by the United Nations as least developed in terms of their low gross domestic product (GDP) per capita, weak human assets and high degree of economic vulnerability.

This Report argues that the LDCs need to go beyond business as usual in order to promote inclusive and sustainable development and it suggests how South–South cooperation supports such a transformational agenda. Findings show that despite strong GDP growth during the last decade, the benefits of growth were neither inclusive nor sustainable, mainly because growth was not complemented by structural transformation and employment creation. Growth and trade has not-recovered to pre-crisis levels after the global recession of 2009. Most LDCs continue to deepen their specialization in exports of primary commodities and low-value, labour-intensive manufacturing, rather than diversifying into more sophisticated products. Growth projections also indicate that the poorest countries of the world could face a more volatile and less expansive global economic environment in the coming decade.

Further, the Report examines how South–South cooperation could support development LDCs against this background. It shows that there are intensifying economic relationships between the LDCs and other developing countries and that these helped to buffer LDCs from the downturn in advanced economies. A major new trend in the pattern of integration over the last decade or so has been the deepening and intensification of economic and political ties with more dynamic, large developing countries, acting as growth poles for the LDCs. While intensifying South–South relations presents major new opportunities for LDCs in terms of markets, foreign direct investment, remittances and official financing, they also bring many challenges, ranging from extreme competition to de-industrialization. Therefore, the long-term impact of South–South economic relations on the LDCs still remains a puzzle.

18 November 2011

Economic inequality is a hot topic. Most people are now aware that the rich have got richer, leaving everyone else with less to share. However, most do not know why the situation has got so bad and what to do about it. Tax is the obvious remedy, but in the current context where demands are growing on shrinking public resources, this is not a realistic possibility.

nef’s research sets out to consider how to tackle inequality at its source. It explores pre-tax or market income inequality, bringing together the academic literature that identifies the key factors and processes that have caused inequality to grow in the UK. It also considers how more equal countries have successfully addressed causal factors. Finally, it uses these findings to highlight policy areas that offer potential direction for change.

Findings

There are multiple reasons why inequality has grown, and varying degrees to which each factor has mattered. In order to sort and make sense of these factors we have grouped them under five headings:

Initial conditions: the economic situation that people are born into, including wealth and asset ownership.

Channels of influence in early life: the routes that could potentially inflate unequal starting points, most notably early childhood education and care, primary and secondary education.

External influences: globalisation and liberalisation are two major external forces that have both directly fuelled inequality and played a considerable role in shaping the UK economy and labour market.

The national economic system: including the make-up of sectors and profile of the labour market.

The political system and tax: the type of political system, namely if it is proportionally representative or not, dictates the likelihood of governments tackling inequality. This in turn influences the progressive or regressive tilt of tax policy.

11 November 2011

This research confirms and refutes numerous stereotypes about financial services professionals working in the City of London. In response to certain questions, the respondents play to type. For example, ‘salary and bonuses’ are the most important motivation for professionals working in the FS sector in London for 2 in 3 (64%) of participants. ‘Enjoyment of the work’ comes a distant second. However, in other areas, they confound the stereotype of ‘greed is good’ capitalists. Most notably, FS professionals in London tend to think that bankers, stock brokers, FTSE 100 chief executives, lawyers and city bond traders are being paid too much. Moreover, most

FS professionals in London think that deregulation of financial markets results in less ethical behaviour. FS professionals in London tend to be positive about Corporate Social Responsibility (CSR) in their companies, with the majority agreeing that CSR is discussed and incentivised in their workplace. They also tend to reject the notion that CSR has a negative effect on shareholder value. Most notably of all, 75% agree that there is too great a gap between rich and poor in this country, and 58% agree that companies should invest directly in deprived communities.

Levels of knowledge on the history of the FS in the UK varies considerably, with the most experienced professionals far more knowledgeable about the history of the City and the economy more broadly.

Most do not know the London Stock Exchange’s (LSE) motto (just 14%).

Most FS professionals are not aware of earlier recessions in the UK around 1980 and 1990/91.

Many are not completely familiar with what happened after the financial ‘Big Bang’:

– 2 in 5 think that the LSE crashed following the ‘Big Bang’.

– 1 in 3 disagree that the financial markets were deregulated.

– 2 in 5 are not sure whether firms were allowed to be owned by an international corporation, although 42% say that was the case.

– The majority do not know that minimum scales of commission were abolished and whether individual members of the LSE ceased to have voting rights.– More than two-thirds (69%) did not know that the financial ‘Big Bang’ happened in 1986.

Over the last six years, while 85% of countries are improving their gender equality ratios, for the rest of the world the situation is declining, most notably in several African and South American countries. The sixth annual World Economic Forum Global Gender Gap Report 2011 shows a slight decline over the last year in gender equality rankings for New Zealand, South Africa, Spain, Sri Lanka and the United Kingdom this year, while gains are made in Brazil, Ethiopia, Qatar, Tanzania and Turkey.

Selected Findings:

Nordic countries (Finland, Iceland, Norway and Sweden) continue to hold top spots having closed over 80% of their gender gaps

Women hold less than 20% of all national decision-making positions

India ranks lowest on gender parity among the BRICS countries

USA continues to improve, moves up two places

UAE ranks highest in the Arab World with Saudi Arabia improving the fastest over past 6 years

The Global Gender Gap Index introduced by the World Economic Forum in 2006, assesses 135 countries, representing more than 93% of the world’s population, on how well resources and opportunities are divided amongst male and female populations. The Index benchmarks national gender gaps on economic, political, education- and health-based criteria, and provides country rankings that allow for effective comparisons across regions and income groups, and over time. The rankings are designed to create greater awareness among a global audience of the challenges posed by gender gaps and the opportunities created by reducing them. The methodology and quantitative analysis behind the rankings are intended to serve as a basis for designing effective measures for reducing gender gaps.

05 November 2011

Ofcom have just launched digital communications coverage maps, including outdoor mobile coverage and mobile broadband availability, using data supplied by communications providers. The maps are part of Ofcom’s first report on the UK’s communications infrastructure which it is now required to submit to the Secretary of State for Culture, Media and Sport every three years. Ofcom’s report also refers to the coverage and capacity of the UK’s landline network, digital radio and TV.

Each of the 200 areas of the UK has been ranked according to a score given for coverage and colour coded with green ranking highest and red lowest.

Ofcom’s data shows considerably better household coverage compared with geographic coverage. This is because mobile providers tend to prioritise investment in network infrastructure where the maximum number of consumers and businesses can be served.

The maps show that 97% of premises and 66% of the UK landmass can receive a 2G signal outdoors from all four 2G networks. This means that approximately 900,000 UK premises do not have a choice of all four 2G mobile networks.

For 3G, 73% of premises and 13% of the UK’s landmass can receive a signal outdoors from all five 3G networks, with lower coverage in less densely populated areas. This means that approximately 7.7million UK premises do not have a choice of all five 3G mobile networks. The areas of lowest 3G geographic coverage are in the highlands of Scotland and mid-Wales which are both sparsely populated with hilly terrain.

The report also shows significant demand for broadband data from UK consumers. Residential fixed broadband customers are using on average 17 Gigabytes of data per month. This is the equivalent to downloading more than 11 films per month, streaming 12 hours of BBC iPlayer HD video or more than 12 days of streaming audio content. This compares with mobile broadband demand which is on average 0.24 Gigabytes per month per connection.

Abstract:The international financial and monetary system must adapt to the global economy’s upcoming challenges by laying down the foundations for renewed world macroeconomic and financial stability. The authors of this report present a set of concrete proposals aimed at improving the international provision of liquidity in order to limit the effects of individual and systemic crises and decrease their frequency. The recommendations outlined in the report include:

Develop alternatives to US Treasuries as the dominant reserve asset, including the issuance of mutually guaranteed European bonds and (in the more distant future) the development of a yuan bond market.

Make permanent the temporary swap agreements that were put in place between central banks during the crisis. Establish a star-shaped structure of swap lines centred on the IMF.

Strengthen and expand existing IMF liquidity facilities. On the funding side, expand the IMF’s existing financing mechanisms and allow the IMF to borrow directly on the markets.

The report discusses the role of the special drawing rights (SDRs) and the prospects for turning this unit of account into a true international currency, arguing that it would not solve the fundamental problems of the international monetary system. The report also reviews the conditions under which emerging market economies may use temporary capital controls to counteract excessive and volatile capital flows. The potential for negative externalities requires mutual monitoring and international cooperation in terms of financial regulation and suggests that the mandate of the IMF should be extended to the financial account.

This report is available to current London Business School students, faculty and staff from CEPR Papers via the A-Z list of library databases within Portal.